Business services are additional activities that support the primary operations of a company. This category includes any intangible services that serve as the backbone of businesses, such as banking, IT, insurance, legal, and marketing. Some examples of business services include a payroll service, a website hosting provider, and an insurance brokerage.
According to the European Union, the Business Services sector contributes about 11% of the European economy’s GDP and is one of the largest business sectors in Europe. This sector consists of a wide range of activities, from technical services such as engineering and architecture to professional services such as employment services and legal services. In addition, the industry also includes warehousing and distribution services, which are becoming increasingly important in enabling firms to add value to their products through new combinations of goods and services.
These new combinations of goods and services have fueled the growth of the Business Services sector, which now includes many formerly separate industries. For example, the warehousing and distribution sector includes activities such as packaging goods, controlling and managing inventory, order entering and fulfillment, performing light assembly, marking prices, and shipping to customers. In addition, this sector now encompasses a wide range of information technologies that enable these new combinations. For example, the industry uses technologies to improve customer relationships through enhanced customer service and more personalized and targeted marketing, as well as for improving the efficiency of supply chains by automating and integrating processes.
Unlike tangible goods, which can be sold and consumed at different times, business services are intangible and cannot be stored for later use. This characteristic, along with the fact that they are delivered over a network instead of in the form of a physical object, distinguishes business services from the rest of the economy.
The five characteristics of Business services are as follows:
1. Intangibility: Business services are intangible and can not be touched. They are supplied over a network, and therefore are not subject to physical limitations or restrictions on their availability. Examples of business services include IT services such as a firewall, software services such as a cloud infrastructure platform, and management services such as a facility management service.
2. Inseparability: In the case of business services, production and consumption occur simultaneously. They are not distinct from the product that is produced, and thus may be affected by factors such as the quality of interaction between a service provider and a consumer. In contrast, tangible goods must be produced before they can be sold and consumed.
3. Consistency: Inconsistent experiences with a business service can lead to inefficiency. For this reason, it is important to measure and track the consistency of a business service in order to identify potential improvements.
4. Adaptability: In business, change is inevitable. As such, business services should be designed to be flexible and responsive to these changes by allowing for the reuse of components within a service model. This is called service-oriented architecture, and it provides a method for structuring automated business logic so that it can be re-modeled quickly to reflect changing business requirements.